20 years on, how the Zimdollar died

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20 years on, how the Zimdollar died

2009 – On January 16, Zimbabwe makes history; it releases a $100 trillion note, the largest denomination ever seen in the world. It is later to become a collectible, and a symbol of failed economic management.

Zimbabwe effectively dollarises on January 29, when, for the first time ever, a budget is presented in both US dollars and Zimdollars. Acting Finance Minister Patrick Chinamasa reels off the dizzy numbers, including $175 quadrillion for grain imports. His budget speech is accompanied by howls of laughter and derision from MPs.

The move to USD overnight eradicates hyperinflation, but the economy soon swaps hyperinflation for deflation.

The Zimdollar remains in circulation, although nobody is using it. On 2 February, the RBZ removes a further 12 zeros off the currency. In total, 25 zeroes were removed from the Zimdollar.

This was the beginning of the end of a currency that at Independence in 1980, was stronger than the US dollar, trading at 1ZWD: US$1.54.

In August, Gono proposes return of Zimdollar. He is criticised sharply, even by The Herald, which calls him out of touch and unable to “read the national mood”.

In his mid-year budget, Finance Minister Tendai Biti, appointed in February as part of the unity government, announces the local currency will be demonetaised, saying he is “putting a tombstone on the grave of the Zimbabwe dollar”.

2013 – In March 2013, concern grows as Zimbabwe slips into deflation.

2014 – RBZ authorises use of a dozen currencies to trade alongside the dominant US dollar. The currencies include the Indian rupee, the Japanese yen and the Chinese yuan. The bond coin is introduced, as a means of ending the shortage of small change.

2016 – The RBZ announces it will launch a bond note, which would be at par with the US dollar. The bank calls it an export incentive, a deliberate twist of PR meant to ease fears in an economy still traumatised by memories of 2008. It is months before the first notes appear.

2017 – Bond notes and US dollars start disappearing from the market. Government spending is rising, fuelling inflation. In September, consumers go panic buying after rumours of shortages. Prices rise foreign currency shortages deepen. Inflation, once again, is back on the march.

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The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.